Surviving the Next Economic Crisis: Corporate

entrepreneurship strategies of Thai automotive SMEs
Dr. Laddawan Lekmat, School of Business, University of the Thai Chamber of Commerce, Thailand
Dr. John Chelliah, Business School, University of Technology, Sydney, Australia

This paper examines the antecedents to corporate entrepreneurship (CE) in Thailand’s auto-parts
manufacturing industry in the post Asian financial crisis era using a mixed-method approach. There is a
lack of research on CE strategies of SMEs in response to the Asian financial crisis in developing Asian
countries. This paper presents a model based on existing CE theory where organizational strategy,
culture and the environment impact on CE and organizational performance. Structural Equation
Modeling was used to analyze data collected from 220 chief executives/deputy chief executives who
participated in this research. The results suggest that environmental and organizational factors impact on
CE which in turn influences firm performance in terms of both financial and non-financial aspects.
Significantly, non-financial performance was found to influence financial outcomes. This paper
demonstrates that CE is important not only for wealth creation but also for efficient processes and
operations, all of which reflect on overall performance. As there is a dearth of empirical research in this
area, this paper makes a useful contribution to knowledge by highlighting the CE initiatives of Thai SMEs
to survive future crisis and stiff competition in the Asian region.
Keywords: corporate entrepreneurship; financial crisis; emerging economies; antecedents; mixedmethod research.
Entrepreneurship is an important feature of organizational and economic development as well as
wealth creation (Antoncic and Hisrich, 2004). Researchers and practitioners have increasingly been
interested in the concept because of the positive effect on revitalization and performance of firms
(Antoncic and Hisrich, 2004).
In recent years globalization and advances in technology have forced Thailand to re-evaluate its
economic strategies and policies (BOI 2006). Thailand suffered significantly during the Asian financial
crisis in 1997 when about one-third of the Thailand‟s publicly listed companies were wiped out (Sebora,
Theerapatvong and Lee, 2010). During the crisis, individual entrepreneurship and intrapreneurship or
corporate entrepreneurship (CE) suffered significantly. In the aftermath of the crisis, entrepreneurs must
now compete more intensely against foreign competitors in the Asian region such as China (Looney,
2004). Thailand aims to improve its productivity and up-skill from low-cost high-productive labour as an
investment attraction to a knowledge-based economic system driven by innovation and cutting-edge
technology. Given that Thailand is undergoing economic transformation, cultivating entrepreneurship and
facilitating organizational transformation are therefore fundamental to economic growth and the wellbeing of many individuals (Pearce and Robinson, 2009). In Thailand, private business enterprises such
as auto-parts manufacturing firms play an important role in economic development, contributing to

the rationale for the development of a theoretical model of CE antecedents and performance for the . Awbre. Zahra et al. 1989. 2008). resulting in sustain growth and competitive advantage (Yiu and Lau. Further. Yiu and Lau. This paper extends the CE literature by integrating previous research findings of researchers such as Antoncic and Hisrich (2001). Finally. production. there has been very little research in antecedents and performance of CE in developing countries and emerging economies. particularly Thailand (Sebora and Theerapatvong. CE is therefore recognized as an effective means for emerging-economy firms to revitalize. 1997) and found that their redefined measure of CE is more complete due to a combination of four dimensions in a single study and is more parsimonious in eliminating redundancy in the innovative dimensions. As such. Thailand is worthy of research in this area because it has one of the fastest growing economies in South-East Asia. innovativeness involves creation of new products. This suggests that the development and enhancing entrepreneurial mindset could also be of benefit to the Thai auto-parts manufacturing firms. Third. and is valid in a cross-cultural setting. CE has been highlighted as a key factor for economic transformation and development to foster innovation and wealth creation (Kontoghiorghes. and organizational change. and the creation of new products. services. and Feurig. CE−performance relationships have been examined mainly based on financial aspects. 2004). services. Dess et al. THEORETICAL MODEL AND HYPOTHESES CE is defined as entrepreneurship in an existing organization (Antoncic and Hisrich. 2005). However. particularly growth and profitability. CE is viewed as an internal process in an existing firm that leads to a variety of innovations such as the renewal of operations. Jennings. reconfigure resources and transform into knowledge-based or innovation-oriented firms that are ready to compete in the global economy (Antoncic and Hisrich. and Kuratko. First. 2001). new business venturing refers to the creation of new business within the existing company that are related to the firm‟s current products and markets. Antoncic and Hisrich (2001) developed a multidimensional CE construct by integrating previous research studies (Covin and Slevin. their research classified CE into four characteristics. self-renewal refers to strategy reformulation. Covin and Slevin (1991) and Zahra et al. a transition economy. Thus. (1999). The paper attempts to address these problems by investigating and exploring both external and internal environments that stimulate entrepreneurship inside organizations. Based on the works of these researchers. (1999) argue that CE is a knowledge-creation process. the literature has a quantitative bias ( Zahra. while non-financial criteria have not been explicitly examined (Mair and Rata. processes and markets. Second. reorganization. 2010. This paper aims to fill these gaps in the literature using a mixed method approach. Sebora et al. Thus. Antoncic and Hisrich‟s (2001) study was conducted in the United States. (2003) support this view suggesting that CE promotes organizational learning and develops new knowledge. pro-activeness reflects top management orientation to take risk and aggressively and proactively compete with industry competitors. exploring CE may be one way to increase awareness of the auto-parts manufacturing sector‟s competitiveness. 2004). the focus on upgrading the capabilities of the Thai auto-parts manufacturing companies is critical. 2010). and technologies. According to Antoncic and Hisrich. 2004. and national income as well as providing opportunities to lessen poverty (Limsavarn.employment.. Knight. 2008). 1999) which gives rise to the possibility of enriching the body of knowledge with more qualitative research. a developed country and Slovenia. In addition. and entrepreneurial activities‟ outcomes in terms of both financial and non-financial performance.

Morris et al. on the other hand.. are widely used in literature and are found to influence CE (Covin and Slevin. Lumpkin and Dess. 2000). It is more likely that firms will be entrepreneurial when competitors‟ products change rapidly or when customer needs fluctuate (Kollmann and Stockmann. Zahra and Garvis. Firms operating in many different markets are likely to learn from their broad experience with competitors and customers. 2008. Therefore. represents the degree of threat to the firm posed by the intensity of the competition and the downswings and upswings of the firm‟s principal industry. The theoretical model is based on the simple premise that conditions in the environment and the organization influences entrepreneurial activities in the firm which affects organizational performance. environmental dimensions are expected to be predictors of CE and the following hypothesis is put forward: Hypothesis 1a: Environmental dynamism will have an impact on CE. Further. Morris et al. 1989. Environmental conditions are viewed as a multidimensional concept (Zahra. 2008. 2008. Kollmann and Stockmann.. Environment variables including dynamism. Organizations often respond to challenging conditions found in dynamic or high technological environments by adopting an entrepreneurial posture (Antoncic and Hisrich. 2001). 1993a). Hypothesis 1c: Environmental heterogeneity will have an impact on CE. . Hostility. Thus. 1993b). Dynamism refers to the perceived instability and continuing changes in the firm‟s market.. Figure 1: The theoretical model of CE antecedents and effects ENVIRONMENTAL CONDITIONS The external environment has historically been the focus as the predictor of CE (Covin and Slevin. hostility and heterogeneity. 2008). Hypothesis 1b: Environmental hostility will have an impact on CE. Dess et al. manufacturing sector in Thailand is detailed and the relationships are illustrated in Figure 1. it is likely that entrepreneurial behaviour will follow (Entrialgo et al. 2001. Zahra. based on Miller and Friesen‟s (1983) study.. heterogeneity encompasses variations among a firm‟s markets that require diversity in production and marketing orientations. 1997. which provides initial conditions that either facilitate or constraint a firm‟s entrepreneurial behaviour (Kollmann and Stockmann. 2008). 2004).

2000. and Reactor. Culture that supports innovation tends to stimulate organizational members to take CE initiatives (Kuratko et al. non-innovative and risk-aversive). the following hypothesis is put forward: Hypothesis 3: Organizational culture will have an impact on CE. and the findings indicate that organizational support can be an important predictor of CE. (1993). 1978: 557) many researchers have tended to exclude the Reactor strategy (Conant et al.. 1990. performing poorly as a result. 1999). Thus. 1992). In addition. 2005). 1990). Russell and Russell. Kald et al. 2000). consistently attempting to be first in the market. Hypothesis 2b: Analyzer strategy will have an impact on CE.. the Reactor type lacks a consistent strategy. the Analyzer type is an intermediate hybrid. al. Firms adopting this orientation are non-adaptive. Unlike the Prospector. this paper uses only three feasible strategy types. 2004. defensive. time availability.. Moreover. Naffziger et. Analyzer. Based on this understanding. The literature is highly supportive of the use of the Miles and Snow‟s (1978) typology in both small and large companies. Miles and Snow‟s strategic orientation focuses on the direction and influence given by the top management to the firm‟s overall vision and direction. 2004) studies. 2008). for evaluating the determinant effects on CE. autonomy and work discretion. The Prospector type frequently adds to and changes its products and services and markets. Four different strategies are identified based on organizational adaptation to the changing operating environment: Prospector. In Antoncic and Hisrich‟s (2001. and is then reluctant to act aggressively in the future” (Miles et al.ORGANIZATIONAL STRATEGY The firm‟s strategy is another variable influencing CE. reward and reinforcement. combining the strengths of both the Prospector and the Defender into a single system. Russell. because the Reactor strategy responds “inappropriately to environmental change and uncertainty. the Defender type tends to emphasize maintaining market share through low cost and efficiency in narrowly defined market segments. Hypothesis 2c: Defender strategy will not have an impact on CE.. Matsuno and Mentzer. Firms adopting this orientation protect existing products and markets through efficiency-oriented strategies while cautiously penetrating new markets through intensified product or market innovation. Defender. Growth primarily arises from the development of new markets and the expansion of product offerings (Shortell and Zajac. (2003) also suggest that culture influences the management style and shapes entrepreneurial behavior of individuals and groups in the company at all levels. The following hypothesis is therefore put forwarded: Hypothesis 2a: Prospector strategy will have an impact on CE.. Organizational culture characteristics such as management support. CORPORATE ENTREPRENEURSHIP AND FIRM PERFORMANCE The literature highlights the importance of CE for improving a company‟s performance. and loose organizational boundaries (Hornsby. 2001. The most common measures of performance in CE studies are growth and profitability and the research findings . ORGANIZATIONAL CULTURE A general consensus in the literature is that corporate culture plays a critical role in shaping CE (Morris et al. and confirms that their typology influences entrepreneurial activities (Moreno and Casillas. Prospector. Gray et al. 2001. 2008. the organizational support dimension is measured by items from Hornsby et al. Thus. Finally. Antoncic and Scarlat. Analyzer and Defender. 1993) are critical to foster an entrepreneurial culture in organizations (Antoncic and Hisrich.

.500. Mair and Rata. 220 questionnaires were returned with 207 useable responses. yielding a 52% response rate. . This shows that some of the companies covered in this study were not early start-up businesses but could be considered to be in the later stages of business development. measuring performance employing non-financial criteria has been recognized recently in the CE field and some researchers argue that non-financial criteria can be insightful in the early years of an entrepreneurial project (Dess et al. In addition to the quantitative data from the mail survey. Zahra 1993b). Zahra. Therefore. in pursuit of broader insights in relation to CE in the Thai automotive industry both quantitative and qualitative methods were deployed in this study. quality of product and service and new product and service development can be useful in evaluating the performance of CE (Carton and Hofer. 2005. Douglas et al. 10 CEOs or their deputies who participated in the survey were selected for the interviews. The companies had been in business for between five and 56 years with a mean of 17. On the other hand. 2006. employee satisfaction. 1993a). The questionnaire was pre-tested with six CEOs of Thai auto-parts manufacturing firms (not included in the final sample) in order to ensure the integrity of the translation and to improve the understanding of the questions. The questionnaire survey was originally developed in English then translated into Thai and then back-translated into English (Brislin. 2003. where both quantitative and qualitative methods were used. 2005). 2004). The data was collected from February to November 2008. 1989. 2007). non-financial criteria such as customer satisfaction. Hypothesis 4b: CE will have a positive influence on non-financial performance.1% were large companies. Thus. 1980).9 % small-sized to medium-sized enterprises (SMEs) and 40. CEOs or their deputies of the sample firms were selected to participate as they would be most knowledgeable about the overall situation. Since quantitative and qualitative methods have different strengths and weaknesses. The responses yielded 59. 1970). Research findings support a positive association between CE and non-financial performance (Holt et al. CE is expected to be related positively to performance. a desirable feature of such studies is that they provide a greater degree of control over market and environmental characteristics (Snow and Hambrick. Covin and Slevin. 2004.80) and a median of 16 years (N = 207).99 years (SD = 10. Although the generalizability of findings of single-industry-based studies is limited. MEASUREMENT A seven-point Likert-type scale was used in the research and specific reference was provided for each measure. The following hypothesis is put forward: Hypothesis 4a: CE will have a positive influence on financial a positive association between CE and financial performance (Antoncic and Hisrich. it has been argued that researchers should try to use multiple research methods to provide broader insights into issues being studied (Creswell and Clark. Dess and Lumpkin. activities and orientations of the firm (Fitzsimmons. 2005). 400 companies were randomly selected from the Thailand Automotive Industry directory 2006−2007. Firms below 200 employees were classified as SMEs and 200 and above employees as large companies.. Therefore. This is discussed below. 2001. METHODOLOGY This paper employed a mixed-method research.Wiklund and Shepherd. The firm size (number of employees) ranged from 12 to 27. 2007..

Defender and Reactor were used to measure organizational strategy. reflecting support activities for creativity and innovation. Third.Vajanapoom. Defender. and it allows rapid collection of substantial data (James and Hatten. as research provides strong support for the perceptual measurement validity and reliability of Miles and Snow‟s strategic orientations (Shortell and Zajac. This instrument consisted of five items measuring environmental dynamism. and the subsequent innovative-driven strategies it adopts. 1978). and Reactor. The Prospector and Defender types classified by Miles and Snow exhibit similar attributes to strategy archetypes identified in other studies. differentiation and cost leadership (Porter 1980). The responses of the respondents were tabulated using three dummy variables. Miles and Snow‟s (1978) typology is useful for analyzing the ways in which organizations respond to changing environmental conditions. Thus. it is able to measure strategy at a level of abstraction sufficient to apply across a wide variety of organizations and industries. One item that measured training was developed by Zahra (1993b). These items were developed by Christodoulou (1984). Another four items were participative decision making. autonomy/work discretion. strategic management and entrepreneurship (O'Regan and Ghobadian 2005. 1983). 1995). This approach enables firms to give an objective response and avoids any unnecessary bias. Analyzer. Analyzer. Second. This scale was developed by Miller and Friesen (1982.1984). These items were developed by Hornsby et al. Organizational Culture 12 items were used to measure organizational culture. and reward/ reinforcement. 1990). (1993). 1973). the innovator and dominant type (Miller and Friesen. 2005). Organizational adaptability corresponds to an entrepreneurial orientation (Miller and Friesen. Organizational Strategy This measurement instrument for organizational strategy was developed by James and Hatten (1995) based on the Miles and Snow (1978) classification. Moreover. Miles and Snow‟s (1978) typology focuses on the direction and influence given by the top management to the firm‟s overall vision and direction. Entrepreneurship is traditionally considered as a proactive process influenced by the external environment. Seven items measured management support. The Miles and Snow‟s typology was chosen in this study for three reasons. where firms might try to give preferable responses. 1984). Descriptions for Prospector. 1978). including the entrepreneurial and planning mode (Mintzberg. . it is widely recognized in the theoretical and empirical research in the literature on strategy. Four different strategies are identified based on organizational adaptation to the changing operating environment: Prospector. and three items measuring environmental heterogeneity. the measurement instrument is logically appealing since top managers‟ perceptions largely define strategy. First. and build and harvest (Gupta and Govindarajan. that is. five items measuring environmental hostility. being open and cooperative and teamwork. the rate at which an organization changes its products or markets to maintain alignment with its environment. it focuses on the dynamic process of adjusting to environmental change and uncertainty (Miles and Snow. This nature of this typology makes it appropriate for study of CE in developing countries which are transitioning from the use of inputs from resource mobilization to technical progress and efficiency.Environmental Conditions 13 items were used to measure environmental conditions.

06.98. Bollen-Stine Bootstrap p = 0.73.75 Environmental Hostility Government policies 0.04. the problematic items were removed in order to improve the fitness of the model.98.05. Four items measured new business venturing. The results of the measurement models showed good fit for all the constructs as follows: environment construct χ2 (17) = 22.93 and CFI = 0. RMSEA = 0.18. CEOs‟ perception of organizational performance compared to their main industry competitors over the past three years were used (Dess et al. Results Based on the CFA results. In addition. GFI = 0.73 0.05. RMSEA = 0. SRMR = 0. SRMR = 0. CE construct χ2 (84) = 116.. three items measured pro-activeness and five items measured innovativeness.99.59 Degree of change in product and service 0. each of the measurement models was evaluated and refined by confirmatory factor analysis (CFA) prior to testing the full model. and firm performance construct χ2 (8) = 18. three items measuring business performance and two items measuring organizational effectiveness. p = 0.72 Degree of change in marketing practices 0. Bollen-Stine Bootstrap p = 0. RMSEA = 0.97.97 and CFI = 0.17. SRMR = 0.13.68 .15. Bollen-Stine Bootstrap p = 0.item instrument was used to measure corporate entrepreneurship. SRMR = 0.04. 2005). GFI = 0.93 and CFI = 0. Then the assessment path analysis was performed to test relationships between CE and its antecedents as well as its effects. To capture different aspects of small and private enterprises‟ business performance. Table 1: Confirmatory factor analysis results and scale reliability Constructs and items Factor Loadings Environmental Dynamism Degree of change in technology 0.04. GFI = 0.48. Analysis Structural equation modeling (SEM) was used for the quantitative data analysis as it allows for simultaneous estimation of multiple and interrelated dependence relationships and provides a conceptually appealing way to test theory and assesses how well the theory fits reality as represented by data (Kline.99. 39 items were retained and these with the scale reliabilities are listed in Table 1. Firm Performance An 8 item instrument measured financial performance. the results suggested high validity and reliability of the measurement models. providing a more holistic conceptualization of performance. Both data sets were integrated for the interpretation. 1997). This instrument was developed by Hart and Quinn (1993) and consisted of three items measuring financial performance. SEM with AMOS 16 followed a two-step approach.03. All these items were developed by Antoncic and Hisrich (2001) by integrating two key measures: ENTRESCALE from Knight (1977) and the CE scale from Zahra (1993). eleven items measured self-renewal.05. GFI = 0. culture construct χ2 (48) = 87. These scales addressed both financial and non-financial aspects.Corporate Entrepreneurship A 23. Firstly. When the models were validated. RMSEA = 0.97 and CFI = 0.08.79 Alpha 0. content analysis was employed for qualitative data analysis in the interpretative framework.

80 0.74 0.78 0.79 0.80 .80 0.87 0.83 0.77 0.66 0.69 0.80 0.72 0. aggressive posture) Risk-taking proclivity Financial Performance Profit in comparison with the major competitors in last 3 years Cash flow in comparison with the major competitors in last 3 years Sales growth in comparison with the major competitors in last 3 years Non-financial Performance New product/service development in comparison with the major Factor Loadings Alpha 0.61 0.73 0.77 0.80 0.59 0.80 0.84 0.78 0.88 0.77 0.Constructs and items Environmental Dynamism Degree of change in technology Degree of change in product and service Competition in product quality Environmental Heterogeneity Degree of diversity of customers‟ buying habits Degree of diversity of competitors‟ activity Degree of diversity of required methods of production and service Management Support Management encouragement for creative and innovative activities Support for small experimental projects Seeding money to get projects off the ground Training employees for creative and innovative activities Autonomy Allowing employees to make decisions about their work processes Avoiding criticizing employees for making mistakes Reward Recognition the ideas of innovative people Providing rewards contingent on performance Involvement Participative decision-making processes in and between different organizational levels Widely communication of the company‟s mission.84 0.70 0.86 0.68 0.94 0.81 0.79 0.87 0.79 0.60 0.66 0.83 0.65 0.74 0.83 0.84 0.32 0.74 0.72 0. strategy and objectives to employees Communication and co-operation between different department Teamwork rather than individual contributions New business venturing Broadening business lines in current industries Pursuing new businesses in new industries that are related to current business Finding new niches for products in current markets Entering new businesses by offering new lines and products Innovativeness Company‟s spending on new product development activities The number of new products added by the company Product lines Product changes Self-renewal Revising the business concept Reorganizing units and divisions Coordinated activities among units Adopting flexible organizational structures Pro-activeness Competitive posture (“undo-the-competitors” posture) Decision-making style (bold.87 0.80 0.82 0.82 0.57 0.91 0.

41 to 0. 43 % of the variance in non-financial performance. CMIN/DF = 2. GFI = 0.85.72 competitors in last 3 years Quality of product/service in comparison with the major competitors in 0. GFI and CFI were a less satisfactory fit. χ2 (82) = 228. The model was found not to fit the data well.73 The results of the measurement model showed that all the items are loaded in their specified constructs. Thus. 1988. with standardized loadings from a low of 0. RMSEA = 0.59 for firm performance construct. and r = 0. SRMR = 0. as shown in Figure 2. Hair et al.32 to a high of 0.06.84 last 3 years Employee satisfaction in comparison with the major competitors in last 0. ranging from 0.90 and CFI = 0.84 for culture construct. all factors display discriminant validity.59 Degree of change in product and service 0. CMIN/DF = 2.85) suggest a lack of discriminant validity (Anderson and Gerbing. GFI = 0. Then discriminant validity was assessed where the construct are interrelated.52 for environment construct.89.79.. All antecedents are found to be .37 to 0. from 0. After the acceptable convergent and discriminant validities of the measurement models were specified. SRMR = 0. The χ2 value. Large correlations between latent construct (greater than 0.Constructs and items Factor Loadings Environmental Dynamism Degree of change in technology 0. All factor pattern coefficients and factor inter-correlations were significant.91. 2006).08. RMSEA = 0.70 3 years Note: 39 items were retained and 17 items were removed during confirmatory factor analysis Alpha 0.09. „Defender strategy‟ to „non-financial performance‟ and „non-financial performance‟ to „financial performance‟ could improve the model.00. the adjusted model is preferable. An inspection of the modification indices with theory justification suggested that adding structural paths from „environmental hostility‟ to „financial performance‟.74 for CE construct. Thus.45. and 33 % of the variance in financial performance.94.50 to 0. p = 0.07. Figure 2: Final model of CE antecedents and performance The model accounts for 68 % of the variance in CE.88 and CFI = 0. the full structural model of CE antecedents and effects was tested. Most items were significant with strong evidence of convergent validity. from 0.

001) (H4b supported). The other paths found to be significant at the 0.significant predictors of CE. The Defender strategy was also found to be a significant factor influencing non-financial performance directly and has no influence on CE. Furthermore.05 level. shortage of skilled labour and customer satisfaction are found as variables that should be included in environmental hostility and non-financial performance respectively.001.22 (p < 0. followed by the Prospector strategy (H2a and H2b supported) and organizational culture (H3 supported). a significant result was that environmental hostility has a direct negative impact on financial performance and also perceived to have a negative relationship with CE as an intermediating construct to organizational performance. The standardized coefficients of all paths range from 0. with a standardized coefficient of 0. the Defender strategy does not have an impact on CE (p = 0. CE was also found to have a significant influence on financial performance.71 (p < 0.67.05) (H4a supported). The Analyzer strategy is the most important determinant of CE. CE has the most important impact on nonfinancial performance. and CE is a significant predictor of firm performance. The findings of the qualitative study not only validate the results of the quantitative study but also uncover unanticipated findings (see Table 2 below) For example. Factors Environment Strategy Table 2: Quantitative findings confirmation of qualitative findings Dimensions Indicator Variables Quantitative Findings Dynamism Degree of change in technology  Degree of change in products and  services Degree of change in marketing  practices Hostility Competition in product quality  Government policies  Skilled labor Heterogeneity Degree of diversity of customers‟  buying habits Degree of diversity of competitors‟  activity Degree of diversity of required  methods of production and service Prospector First in the market  Broad product-market domain  Rapid response to opportunity  Aggressive product and market  innovation Take calculated risks  Analyzer Monitor the actions of major  competitors for new ideas Relatively stable product-market  domain Careful new product development  Qualitative Findings                  . There are three additional results from the model. with a standardized coefficient of 0.06) (H2c supported). environmental dynamism and heterogeneity have a significant impact on CE (H1a and H1c supported) but a negative effect on environmental hostility (H1b partially supported). As expected.53 to 0. p < 0. In addition. The study found non-financial performance to have a significant impact on financial performance.

strategy and objectives to employees Communication and cooperation between different departments Teamwork rather than individual contributions Profitability level/return on assets Cash flow Sales growth New product/service development Quality of product/service Employee satisfaction Customer satisfaction Quantitative Findings Qualitative Findings                      -  -  -                 -       Note: Table 2 illustrates the confirmation of the quantitative findings by the qualitative results. The results confirm that the linkage between the constructs in Thai auto-parts manufacturing firms. measuring CE and performance. . They can be seen or considered to be key characteristics that help drive the Thai auto-parts manufacturing firms to cultivate and implement entrepreneurial processes and behaviors in order to achieve excellent performance and competitive advantage. is well supported statistically and conceptually. and production method Management encouragement for creative and innovative activities Support for small experimental projects Seeding money to get projects off the ground Training Allowing employees to make decisions about their work processes Avoiding criticizing employees for making mistakes when being innovative Recognition of the ideas of innovative people Providing rewards contingent on performance Participative decision-making processes in and between different organizational levels Wide communication of the company‟s mission.Factors Dimensions Defender Culture Management Support Autonomy Reward Involvement Performance Financial Non-financial Indicator Variables and market penetration only after their feasibility has been proved Risk-adjusted efficiency Limited and narrow product-market domain Tight control Emphasis on efficient operation for lower cost Risk-averse Seldom change their technology. structure.

Zahra and Garvis. 2000). 2001. 2004. the results from the interviews indicate that a lack of skilled labor impedes the .. The interviews suggest that when environmental hostility intensifies. Therefore. since those leading firms create new competition in the market. The respondents in this research see a hostile environment as a threat rather than an opportunity for entrepreneurs. In a volatile environment. 1993b. 2008). Ricceri. The respondents perceive being innovative in hostile environmental conditions as too risky and involving high cost for any innovation and change. and provide better understanding of the antecedents and performance of CE in Thai context. this is consistent with the argument of Russell (1999). customer service. and operational efficiency for survival rather than high growth and profit. 2008). forceful pro-activeness. 1982. Furthermore. 2004. 2000). Environmental dynamism and heterogeneity offers opportunities that can be derived from the development of new products and technologies and from access to new markets. product quality.DISCUSSION This paper tested a model of CE antecedents and performance in auto-parts manufacturing firms in Thailand. For example. this paper found that environmental hostility has a negative impact on financial performance. Zahra. market and technology added by the firms also create changes in the environments. changes in technology such as electronics systems require firms to commit to research and development and to develop new products and technology if they do not want to be surpassed by their competitors. The interviews suggested that firms are more cautious in unfavorable conditions. This affirms that from environmental management and entrepreneurship perspectives. The findings from interviews support the arguments that entrepreneurial firms not only respond to the challenges in those environment variables but also create changes in such environments (Lumpkin and Dess. and a strong emphasis on novelty can be very hazardous when competitive conditions are becoming more taxing. 1993b). Miller and Friesen.g.” Further. This has been the response of both the SMEs and the large companies. they emphasize marketing (e. establish its brand name recognition. Wheelen and Hunger. and develop customer loyalty. such as unstable political conditions and complexities caused by the international financial crisis impacting both domestic and international markets. The effect of external environment on performance is consistent with the strategic management theory and market-based view. The Thai auto-parts manufacturing firms were found to become conservative rather than entrepreneurial in a hostile environment.. as was found in past research (Zahra. consumer demands such as for smaller and energy efficient cars require firms to develop new products and technology. The results of this paper from both qualitative and quantitative data showed that the external environment is an important determinant of CE. The interview findings of this research help clarify the role of determinant variables in entrepreneurial orientations and activities and the effects of these activities on firm performance. data collection based on quantitative and qualitative approaches can help improve both the reliability and validity of CE research. Furthermore. profits might decline because the cost of a firm‟s operations can increase due to its attempts to build a stronger market position. Industry and country specifics as well as measurement issues may be the reasons for different research findings reported in the literature. Zahra and Garvis. 1989. the external environment cannot be separated from the entrepreneurial process (Dess et al. New product. where the external environment plays an important role in explaining an organization‟s financial performance (Dess et al. Miller and Friesen‟s also support (1983: 223) this perception by suggesting that “extensive risk taking.. This is contrary to the arguments in the literature and findings reported in past research (Covin and Slevin. strength of brand and image).

Prospector and Analyzer) tend to perform equally well if they respond consistently to the challenges in all areas of operation. indicating that the Prospector and Analyzer strategies are similar to each other but are significantly different to the Defender strategy. This finding corroborates the previous study (Antoncic and Hisrich. the variables. Miles and Snow. Covin and Slevin. 2004). 2004. The findings of Conant at el. 1990). 1978. found that the Defender strategy possesses distinctive operational competencies such as „knowledge of customers‟ and „effectiveness of cost control‟. Russell. (1999) suggesting that a combination of low cost and innovation is an important aspect of successful strategies in the context of CE and is becoming common management practice of the world‟s leading companies. In contrast. The Analyzer strategy has potentially greater applicability to CE firms in this paper since competitive advantage in the auto-parts industry is determined by lower cost. this finding is consistent with studies of Miles and Friesen (1982) and Zahra and Garvis (2000). which measure labor as an environmental hostility construct. Cohen. Although the influence of the Defender strategy on market competencies is comparatively weak. . diverse transformation processes. and various methods or means. 1982). 2008). This result corroborates the argument of Dess et al. particularly SMEs. Conant et al. The interviews supported that the global competition has intensified the need for cost-based strategy whilst advances in technology are requiring Thai auto-parts manufacturing firms to become innovative. Matsuno and Mentzer. Matsuno and Mentzer (2000) suggest that firms that adopt the Analyzer strategy may engage in an equally high level of market orientation to avoid falling too far behind companies that pursue the Prospector strategy. such as IBM and Procter and Gamble (Wheelen and Hunger. Results from the interviews indicated that the firms embracing the Defender strategy are more likely to rely on more traditional products in their industry. Miller and Friesen. 1991).. particularly technicians. They further explain this finding regarding the concept of equifinality suggested by Hrebiniack and Joyce (1985) and propose that the same outcomes can be accomplished in multiple ways with different resources. These firms. the Defender strategy does not have an impact on CE. In terms of influence of culture on CE. The qualified workforce. 1999.development of entrepreneurial projects.. This outcome is consistent with prior studies stating that firms using the Defender strategy show a tendency to avoid risk in favor of protecting the company‟s market (Kald et al. engineers and management personnel. are insufficient to meet the needs of the Thai auto-parts manufacturing companies. They focus on overall low cost by improving the efficiency of their existing production and operations while maintaining quality. the Analyzer strategy exhibits a slightly greater impact on CE than the Prospector strategy. This paper supports that a firm‟s success in engaging in CE occurs when the spirit of entrepreneurship permeates every part of the organization (Dess et al. 2000. overall performance is comparatively favorable. This paper found additional insights into the effect of the Defender strategy on non-financial performance. However.g. high quality and innovation. 2002. a high degree of similarity between the Prospector and Analyzer strategies in determining CE was revealed. (1990) supported this notion. Such firms tend to be non-entrepreneurial (Brown et al. 2001). interestingly. The scarcity of labor has not been widely measured in past research. do not have resources and access to modern machines and new technologies. however. 2000. Furthermore.. In relation to the impact of organizational strategy on CE. reward and involvement are found to facilitate organizational members to engage in entrepreneurial initiatives and efforts. Shortell and Zajac. This high degree of similarity is consistent with past research (e. autonomy. rather than emphasizing newer technology and product types. Miles and Snow (1978) suggest that any of the three strategic styles (Defender. including management support..

since success in achieving performance on the primary objectives follows from the secondary objectives. Therefore. This paper enriches CE literature by showing that CE is important not only for wealth creation but also for efficient processes and operations. Waterhouse and Wells (1997: 28).. Although external environmental conditions have less impact on CE. ultimately. 2010). this paper therefore suggests that a company must focus on both results and causes. Mair and Rata. 2005). 1999. This paper suggested that both external and internal environments influence CE. Therefore. Zahra et al. the firm‟s internal process..Furthermore. Thus. Venkatraman and Ramanujam. a developing country. they are also important because external forces influence a company‟s choice of direction and action and.” The primary objective of a firm is usually financial aspects relevant to maximizing shareholders‟ wealth such as profit. The interviews indicate that customer satisfaction is the primary justification resulting from entrepreneurial initiatives. CONCLUSION This paper tested empirically the impact of environmental and organizational factors on CE as well as the relationship between CE and firm performance in the auto-parts manufacturing firms in Thailand. which support the argument of Atkinson. clear and effective strategies for innovation from top management and an entrepreneurial culture shared among organizational members tend to cultivate CE successfully. CE is a complex phenomenon that involves the entire firm. Customer satisfaction reflects the overall performance because it can impact on financial performance in terms of profitability and growth. particularly strategy and culture. the primary advantage of using non-financial performance measures in conjunction with financial performance measures is when they provide information about opportunities that have been created. but not yet financially realized (Carton and Hofer. acting in entrepreneurial ways. all of which reflect on overall . Sebora et al. suggesting that internal environments of firms are the main drivers of CE. 1986). 2004. Moreover. which is consistent with the study of Mair and Rata (2004). Furthermore. 1999. Internal organizational factors. Importantly. Some CE ventures require extensive investments and may take several years before they pay off. the results of this paper demonstrated that CE is a good direct predictor of firm performance in terms of both financial and non-financial aspects. 1997.. there is a strong need for the multidimensional nature of the performance construct when exploring the CE−performance relationship (Kollmann and Stockmann. This confirms prior studies suggesting that all relevant stakeholders such as satisfied customers and satisfied employees are prerequisites for a firm‟s performance (Atkinson et al.Wiklund and Shepherd. rather than exclusively individuals or parts of firms. In regard to this approach. whereas the secondary objectives are usually non-financial aspects and involve process performance such as quality. the findings from the interviews reveal that customer satisfaction is very important regarding non-financial performance. findings from the quantitative and qualitative data of this paper showed that CE has positive and significant influences on both financial and non-financial performance. have a greater impact on CE than external environments. Mair and Rata suggest that performance measurement based primarily on financial performance measures lacks the focus needed for internal and management control.. 2008. It is possible that short-term profitability may suffer from engaging in entrepreneurial activities in the early phase of a project (Kollmann and Stockmann. asserting that “a company‟s success is created by monitoring and managing its performance on the secondary objectives. 2008). CE has greater direct impact on non-financial performance than on financial performance. 2006). the findings of this paper indicate that non-financial performance has a positive and significant effect on financial performance. product and process innovation. customer and employee satisfaction (Dess et al.

CE is viewed globally as a key driver of sustainable growth and competitive advantage in companies and of economic development in nations. It is therefore crucial that for Thai SMEs to understand the forces that drive CE. particularly growth via innovation. The use of multiple informants and multiple methods should be considered in the future to enable researchers to examine closely the extent to which such a bias is present (Matsuno and Mentzer. CE is an effective means by which Thai auto-parts manufacturing firms can improve their performance and achieve competitive advantage. this paper empirically tests CE−performance relationships. a survey research design that relies on a single informant per organization has reliability concerns. future researchers need to explore the stability of the results. one being common method bias. is viewed as the key priority for Thai SMEs long-term survival and prosperity. Also. 1993a). This paper offers some implications that inform managerial practice. and could then be used with longer-term financial measurements to assess potential causal relationships (Carton and Hofer. growth. this paper helps distinguish the two performance constructs and delineates the relationship between them in CE. contributes to the theory development of CE and provide a foundation for further research in this field in developing countries. the results of this paper support theoretical and empirical evidence from the US and other developed countries that CE is an effective means for superior performance in the Thai context. 1999. and develop theories. In addition. especially to improve performance in a rapidly changing business environment and uncertainty in the global economy. Top management should shape and activate CE. future research would be useful to test the model of the antecedents to and effects of corporate entrepreneurship in other industries in order to validate measures. Moreover. which include various aspects of financial and non-financial performance. Second. To the authors‟ best knowledge there is no existing empirical research in this area in CE. In 1997. Zahra.performance. Thailand was among the countries worst affected by the Asian financial crisis. 2007). perceptions of senior managers obtained from self-reported questionnaires create functional biases and an inability to identify sources of variation . the findings of this paper. Building Thailand‟s long run competitiveness and increasing efficiency would lead to more sustainable growth for this country in the Asian region. This weakness can only be overcome by continuous innovation and creation of new ideas. 2006. which may be necessary to represent the overall performance construct as well as contribute to a better understanding of complex CE−performance relationships. Non-financial outcomes may be useful in assessing short-term outcomes. test hypotheses. LIMITATIONS AND FUTURE RESEARCH Since this study focuses only on one industry. this paper provides insights into the impact of non-financial performance on financial performance as it is found in the adjusted model.. Thus. First. how environmental and organizational factors affect the rates and types of firm-level entrepreneurship and the resultant outcomes of entrepreneurial activities by collecting data from other countries. the results in this paper establish new ground for further research to study the relationship. Further. Therefore. Thailand‟s economic growth has been built on the use of inputs from resource mobilization rather than technical progress and efficiency (Seebora and Theerapatvong. This paper makes several contributions to the CE literature. Dess et al. Finally. The findings of this paper support the management and strategic management theories that nonfinancial performance may be a critical factor in improving financial performance. Secondly. 2000) so that greater measurement accuracy might be achieved and the validity of findings confirmed (Bierly and Daly. Consequently. 2010).

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